Central Bank Governor Patrick Honohan has said the actual net cost of issuing the 2008 Bank Guarantee was €40bn.
Speaking at the Oireachtas Banking Inquiry, Prof Honohan said this figure was "whittled" down from the original cost of €64bn.
He said: "It is now more like €40bn after bank fees and with the money from the State selling shares in rescued institutions."
In a revealing session, he said he believed this huge cost "could have been whittled down more" but "it would have been hard to avoid it all".
There were a lot of people and civil servants working very hard to cut the costs and "a lot of very sophisticated work" had been done "which has helped to bring it down".
"The best estimate is around 40 billion euro," Prof Honohan said. "In terms of net long-term costs taking into account the recoverable amounts, the amounts paid in guarantee fees and taking account of when the Government sells shares in the banks.
"There are so many ifs and buts you could spend all morning on it."
Under questioning from Fianna Fáil's finance spokesman, Michael McGrath, it emerged that €5bn of unsecured junior debt has either been paid or is likely to be paid.
Mr McGrath said that since the crisis, losses of about €15bn had been inflicted on so-called junior bondholders out of a total of €20bn.
This meant about €5bn has been paid back to bondholders or will be paid.
In response, Prof Honohan replied: "More could have been saved if subordinated debt was left out of the equation."
Asked by the inquiry chairman Ciaran Lynch where the €40bn had gone, Prof Honohan replied by saying it went on buildings nobody wants to live in and on wages for the builders of those buildings.
It also went on sellers of properties at high prices, he said.
"Some of them did very well, not just land speculators, but perfectly ordinary people."
For others who made bad decisions the money went "up in smoke".
Asked about close relationships between bankers and politicians, Mr Honohan felt while this may have affected attitudes it was "a leap that I am not prepared to make" that it led to any wrongdoing.
Prof Honohan confirmed the view that there had been a definite move towards lighter touch banking regulation from the mid 90s onwards, but said this was the case internationally.
He criticised the overly passive regulatory approach taken by the Central Bank and Regulator in the run-up to the crash.
The former Trinity College academic said the official state response to systemic risks was "a triumph of hope over reality".